San Antonio ‘tech district’ lures Austin entrepreneurs

1of8GrayStreet is transforming the aging Travis Park Plaza building into tech-oriented office space loaded with perks, such as a bicycle storage room, fiber internet and 18-hour retail, bolstering efforts to create a tech district around downtown’s Houston Street.Photo: Courtesy GrayStreet Partners

2of8Local developer GrayStreet Partners plans to transform the aging Travis Park Plaza building into a tech hub loaded with perks such as a bicycle storage room and common lounges.Photo: Express-News file photo

3of8San Antonio-based CaptureRx will move to downtown’s Kress Building next year and increase its workforce.Photo: San Antonio Express-News file photo

4of8The Milam Building in San Antonio was the first high rise office building with air conditioning in the U.S. It opened in 1928. Photo by David Uhler,staffPhoto: DAVID UHLER, STAFF / SAN ANTONIO EXPRESS-NEWS

5of8Real estate investment firm Weston Urban has purchased the 100-year-old Rand Building from Frost Bank. Collaborative workspace Geekdom has plans to move into the eight-story building by year's end. Courtesy of Mike FarquharPhoto: Courtesy Mike Farquhar

6of8GrayStreet plans to turn the Kress building and the former children’s museum on Houston Street into a retail and office hub geared toward tech companies. It recently signed up CaptureRX, a healthcare technology company, to put its headquarters in the building.Photo: /HDRC

7of8The San Antonio Economic Development Foundation is moving its offices to the Weston Centre.Photo: TOM REEL /San Antonio Express-News

8of8TRT Holdings Inc., a Dallas holding company that owns the Omni Hotels and Resorts chain, has joined the development team for the new Frost Tower downtown.Photo: Illustration courtesy of Pelli Clarke Pelli

Some, but not all, local software engineers and entrepreneurs feel confident saying that San Antonio has a dedicated tech district.

They point to a six-block stretch of Houston Street where two of San Antonio’s most ambitious downtown developers, Weston Urban and GrayStreet Partners, are luring tech companies near and far with Silicon Valley goodies such as high-speed fiber optic internet, common lounges, pingpong tables and bicycle storage rooms. Tech Bloc, an tech advocacy group sponsored by companies like Rackspace and SecureLogix, has started branding the district with a logo, a promotional video and a Twitter hashtag.

Google Fiber, web developer Grok Interactive and SeatSmart, a marketplace for sports and concert tickets, all call Houston Street home. The area also houses other tech ventures including, the Geekdom incubator and the CodeUp coding bootcamp. It’s even luring some startups away from Austin.

“What better industry to lead the way in revitalizing the oldest part of our city than the newest part of our economy — the companies of our digital age? It’s just a beautiful narrative,” said David Heard, co-founder of Tech Bloc. “It’s happening in other communities, other cities across the country.”

Weston Urban President Randy Smith isn’t totally convinced just yet. His firm, which was co-founded by Rackspace Chairman Graham Weston, planted the seed for the downtown tech community when it moved Geekdom into the refurbished Rand Building in 2013.

“To me, it’s always more powerful when others proclaim this as a tech district. It can’t just be a few tech guys saying, ‘This is a tech district!’” Smith said. “But what is undeniable is that there is a cluster, and an ongoing clustering, of tech companies downtown … I think organically people are going to start identifying that as a tech district.”

Whether or not it qualifies as a district, the tech presence marks a new era for Houston Street, which was once San Antonio’s premier retail hub. It’s now pocked with empty storefronts, defying attempts at redevelopment. The street is a good place for a digital hub because it is dense and walkable, developers say — crucial elements in the urban lifestyle that Millennial tech workers are looking for.

The demand for tech space downtown has been strong and surprising, even to the developers who built the office space, Weston Urban’s Smith said. The firm thought it would take two years to fully lease the Rand building; it took less than 12 months.

The excess demand led Weston to buy the three-story Savoy Building across the street from Geekdom and the 21-story Milam Building a block away. Both buildings will be “conducive” to tech companies when renovations are complete, Smith said. It’s too early to say whether the new Frost Tower, which is expected to include 400,000 square feet of high-quality, high-rent office space, will be dominated by tech companies like Houston Street, he said.

EasyExpunctions, a startup that specializes in removing customers’ criminal offenses from their records, is relocating from offices on Sixth Street in the heart of downtown Austin to GrayStreet’s Vogue building next month. The tech firm is growing, said founder Yousef Kassim. EasyExpunctions currently operates in five states, but Kassim wants to expand to all 50 over the next few years.

Austin was “awesome,” Kassim said, but he decided to move his 10 employees to downtown San Antonio to be closer to the Alamo City’s startup community, including the mentoring network at Geekdom. He would often drive down to visit the incubator while he was in Austin. He’s familiar with San Antonio from his days as a student at Trinity University and the St. Mary’s University School of Law.

“The decision to do that was based on the emerging tech community, the support system,” Kassim said. “Everybody’s been very supportive. It just seemed like a really good environment to grow and build our company.”

EasyExpunctions is moving into larger offices in San Antonio at a cheaper rate than it would pay in Austin, but cost wasn’t a big factor in the move, Kassim said.

Andrew Trickett, co-founder of local virtual reality startup Merge, said the San Antonio tech scene offers low rents and easy access to investors, especially through Geekdom.

But the Alamo City also has its disadvantages. Large-scale investors are harder to find here than on East Coast and the West Coast, Trickett said. It doesn’t have as much of a startup culture as Austin — some potential employees seem reluctant to take the risk of joining a new tech firm. He wonders if there would be enough local engineering talent to satisfy the company if it strikes gold and goes through a major expansion.

“The investment community is very supportive and it’s great for getting your first check,” he said. But “it’s hard to raise seven digits in San Antonio. It’s not impossible, but it’s hard.”

The development of the tech district was pretty much a one-man show until last spring, when GrayStreet bought the first of what is now 5.5 acres of property around Houston Street. Much of GrayStreet’s properties in the area are being repositioned for tech, Managing Partner Kevin Covey said. Some of them, including the Vogue and Court buildings, are already home to tech companies such as web developer Turner Logic and SpaceCadet, an app for renting commercial space.

This week, GrayStreet revealed plans to refurbish the vacant Kress building and the former children’s museum on Houston Street, creating about 80,000 square feet of office space geared toward tech companies as well as a 15,000 square-foot food hall modeled after the Mercado Roma in Mexico City.

“We are making spaces that have kitchens, we are making spaces that have areas for people to put pingpong tables and billiards tables, video games, lounge areas,” Covey said. “These work environments have taken a different tone than cubicle farms.”

Overall, GrayStreet is on track to operate roughly 325,000 square feet of office space in the area around Houston Street. It is in the process of renovating the aging, 1970s-era Travis Park Plaza at the corner of Travis and Navarro streets into a dynamic building with open floor plans and a paseo running through the middle of the ground floor, among other perks.

To create an environment appealing to digital night owls, GrayStreet is upgrading the building’s air conditioning so it can run economically day and night and is looking for ground-floor retail tenants willing to stay open 18 to 24 hours a day. Covey expects the renovations to be done by next spring.

GrayStreet and Weston Urban have established spheres of influence in the tech district — GrayStreet to the east, Weston Urban to the west. Covey and Smith both said they don’t coordinate their developments, although they stay in touch.

“For a while, we were looking around wondering if we were going to be the only crazy dudes doing things downtown. We don’t have to ask ourselves that question any longer,” Smith said. “What GrayStreet is doing on the east end of Houston and Travis Park Plaza — we’re very thankful for that, and I think he’s going to do very, very well.”

San Antonio has advantages when it comes to attracting tech companies, including a low cost of living and an abundance of young workers. But the city has a lot of work to do to create a flourishing tech district, developers and tech advocates say. A recent report from CBRE, a research firm, ranked San Antonio 45th among U.S. cities in its availability of tech talent; Austin is 5th, Dallas-Fort Worth is 6th, and Houston is 30th.

Tech workers are in high demand and are “extremely portable,” as David Heard put it, forcing cities to compete for them. To attract workers, cities need to offer the urban lifestyle that tech workers want, and San Antonio’s downtown still isn’t as vibrant as those in many other cities.

“San Antonio has a long way to go. We’re largely a suburban experience,” Heard said. The city needs a district where tech workers can “craft a real lifestyle in San Antonio like they could enjoy in other urban communities.”

GrayStreet and Weston Urban are mindful that downtown San Antonio is lagging when it comes to the urban lifestyle, and they’re trying to fix that by attracting high-quality retail to their buildings. Retail shops serve as places where tech workers can run into each other and exchange ideas, Covey said. That’s one of the reasons tech companies like to cluster around each other.

“Walkability is important,” he said.

One of the problems downtown is a lack of mid-range food options, Covey said — something between Whataburger and Lüke. He hopes to fill that spot with the food hall he’s putting in the former children’s museum. In Travis Park Plaza, he imagines an urban market along the lines of Royal Blue Grocery, an Austin chain with stores that are open from 7 a.m. to midnight. He said he gave a “hell of a deal” to La Panaderia, an artisanal bakery near the airport, to open a new location in 6,000 square feet of retail space that’s being renovated in the Vogue building.

A priority for Covey is “making sure we have 10 places down here you can choose for lunch, that you can walk to,” he said.

The tech district scored a victory last week when the San Antonio Independent School District announced it will put a new tech-oriented high school on the campus of Fox Tech High School, a few blocks from Houston Street. The school, which is expected to open its doors in fall 2017, is being created through a partnership with Tech Bloc and H-E-B.

David Heard, the Tech Bloc co-founder, sees momentum building in the downtown tech community. While the CBRE report ranked San Antonio low in tech talent, it shows that the city’s tech population is expanding fast, growing 42.7 percent between 2010 and 2015 to a total of 30,390 workers.

Heard is excited about the growth but wants to avoid the development boom overtaking much of Austin’s downtown, which “has a bubble feel to it,” he said.

“If we can continue the momentum building around the tech district, there’s an opportunity to create San Antonio’s unique version of that urban experience,” Heard said. “It won’t be like Austin’s, it will be our own, but it should be walkable, and it should have more than just places to work — it should have places to enjoy life.”

Richard Webner is the real estate reporter for the Express-News. He moved to the beat in spring 2016, after spending about a year covering retail, hotels, tourism and manufacturing. Before coming to San Antonio, he was a business reporter at the Florida Times-Union in Jacksonville, and he had internships at the Chicago Tribune and the Pittsburgh Post-Gazette, as well as the Express-News in summer 2013. He earned a graduate degree in journalism from the University of Missouri and an undergraduate degree in History from Northwestern University. He grew up in Columbus, Ohio but has had the good fortune to live all over the United States.